Builders still exempt from cladding bills

02 Jul 2019

By Meg Hill

A second VCAT ruling on the Lacrosse fire has reinforced builder exemption from flammable cladding and fire damage.

The first ruling, in February, approved the owners’ claims for damages – $5.7 million – and found the builder, LU Simon, technically liable. But the judgement apportioned 97 per cent of damages to be paid by the architects, surveyors and engineers.

In April, VCAT ruled in favour of the owners’ claims for interest on their loan to fund rectification works and ordered the third parties to pay 100 per cent of it.

They were also ordered to pay LU Simon’s legal fees.

Strata lawyer Tom Bacon said it was an “unusual outcome”.

“The plaintiff (the Owners’ Corporation) is awarded its costs and damages, and the first defendant (LU Simon) is awarded its costs, to be paid by the second, third and fourth defendants,” he said.

“The lesson from this case is that if the builder can prove they built the building in accordance with the plans provided to them, then those who design and certify these buildings that end up being defective will bear primary responsibility.”

In 2014, the Lacrosse building caught fire due to noncompliant and flammable cladding. Since then the cladding has been found to be prevalent in Australian cities, despite being noncompliant.

The Lacrosse VCAT ruling was closely followed as the first case to apportion liability between different parties involved in planning, approving and constructing those buildings.

Apartment owners had been fighting the notion that they should pay for the rectification themselves since the Lacrosse fire, while builders, engineers, architects and surveyors played a blame game.

In October last year the state government introduced a cladding rectification agreement (CRA) scheme to incentivise owners paying for replacements by offering low-interest loans.

But sister publication CBD News revealed this month that not one CRA loan has been granted in Victoria to date.

A 2018 cladding audit identified 354 low/moderate-risk buildings and 275 high/extreme risk buildings in Victoria. The Victorian Building Authority (VBA) continues its audit, having completed over 1000 in the 2018/19 financial year.

It comes amid new modelling released by researhcers from RMIT University in June, which estimated the current cost to replace dangerous cladding on buildings in Victoria at more than $1.6 billion. This figure doesn’t include buildings yet to be audited by the VBA.

Premier Daniel Andrews told 774 ABC Melbourne on June 25 that public money would be used as part of a package of cladding rectification reforms to be announced in July.

It is understood that the government will also establish a new agency Cladding Safety Victoria, which will provide the community with a one-stop-shop for advice and assistance on removing dangerous cladding.